Riot Platforms' $28 Billion Lease with Anthropic: New Veto Power on Power Cuts

Riot Platforms and Anthropic Lease Agreement

On November 4, Riot Platforms finalized a significant lease with artificial intelligence firm Anthropic, which will impact the Bitcoin miner's management of power resources. This agreement stipulates that Riot must obtain Anthropic's approval to reduce its energy usage or participate in programs aimed at responding to demand fluctuations voluntarily. However, if there are mandatory directives from utility providers or grid operators, that consent is not required.

Details of the Lease

The lease was officially signed on October 28, covering an impressive 910 megawatts designated for critical IT functions, with Riot projecting that the contract will yield approximately $28 billion in future revenues over its duration. This figure, however, is based on projected lease revenue, not on actual cash received or current profit.

This arrangement marks a notable shift in Riot’s power strategy, which has traditionally allowed for flexible use of electricity for Bitcoin mining. Specifically, the company has utilized methods such as selling excess contracted power from its Rockdale location and voluntarily lowering energy consumption spikes during the hot summer months in Texas. In the third quarter, Riot reported garnering $25 million through various energy curtailment credits, with savings from peak-demand transmission costs also helping to lower future electricity expenses.

Infrastructure and Financial Responsibilities

As for the specifics of the lease, Riot is responsible for building the necessary infrastructure for both the site and power needs, while Anthropic is accountable for covering all electricity, taxes, insurance, and other associated site expenses. The agreement specifies that base rent will start at $130 per kilowatt of delivered IT capacity per month, with a structured annual increase of 3%. The rent timeline ties the commencement to the installation of Anthropic's modules, enabling a maximum of a 60-day extension if there are installation delays.

Projected Timeline and Conditions

Riot is predicting that the first 400 MW block will come online by June 28, 2027, followed by an additional 200 MW in January 2028, and the final 310 MW by July 2028. However, any delays in delivering the required capacity beyond 60 days can trigger increases in rent credits, capped at a maximum of 270 days for phases that experience delays. If a phase cannot be completed within that timeframe, the agreement includes a termination clause subject to certain conditions.

Reimbursement and Financing Provisions

Furthermore, Riot has committed to reimbursing Anthropic for specific eligible module costs, potentially reaching $4 million for each megawatt of IT power that comes online, contingent upon favorable market financing being available. If Riot is unable to secure financing despite reasonable efforts, it has provisions to credit Anthropic against its rent, which would amortize these reimbursements with added interest over the lease's initial term. This intricate agreement illustrates the evolving dynamics within the cryptocurrency mining sector and its increasing intersection with artificial intelligence operations.